DENVER —Denver’s embrace of the co-working movement is proving to be beneficial for both users and the city’s commercial real estate industry as a whole. The co-working space concept has taken off in the Mile High City in recent years, providing an environment for a unique niche of users to enter the market easily, thrive and ultimately expand into the traditional office model.Although the rise of co-working space in Denver has had a positive impact, the practice certainly isn’t without its growing pains. Just as Uber disrupted the taxi industry and AirBnB disrupted the hotel industry, the commercial real estate sector now has to grapple with changes of its own as the U.S. continues to shift from an industrial-based economy to a cloud-based economy.
Although the local co-working footprint continues to grow rapidly, it still only makes up roughly 0.7 percent of Denver’s total office supply. Therefore, co-working space in Denver has had the benefit of offering a new and creative approach to commercial real estate while remaining small enough to not disrupt the traditional office model.
Avison Young, the world’s fastest-growing commercial real estate services firm, recently released their Topical Report: “Co-working space: How its rise can foster dynamic growth in Denver’s office market.”
“Although some aspects of the co-working community may seem trendy, the rise of this practice represents a fundamental change in the workplace,” comments Jeannie Tobin, the report’s author. “Some corporations are opting to bring the co-working model home by turning excess space in their buildings into shared space.”
The report concludes that the rise of co-working space could have a similar effect on the office market as Colorado’s legalization of marijuana has had on Denver’s industrial real estate sector, which has experienced a rapid decline in vacancy and a rise in asking rates. However, Denver’s current co-working footprint would need to more than double before it reaches a tipping point and becomes truly disruptive in the office market.
“How the co-working model will impact Denver’s office market in the future remains to be seen,” says Tobin. “But at this point in time, it is safe to say that co-working space is here to stay.”
